New York morning: rally paused waiting for new drivers

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

After profit taking in the technology sector, triggered by Fed chief Jerome Powell's comments on high stock valuations, macroeconomic statistics will be the focus of investors' attention on September 24. The key release of the day will be US new home sales data for August (consensus: -0.3% m/m, July: -0.6%), which is another marker of the economy's health. This release is particularly important against the backdrop that the NAHB builder confidence index fell to 32 points in September and new home starts in August fell to their lowest level since Ma. Another negative release could bolster hopes for more decisive action by the Fed to ease monetary policy. In such a scenario, weaker than expected statistics may be perceived positively by the market, as it increases the likelihood of further interest rate cuts.

It will be important for traders to see whether the capital outflow from the shares of technology giants to other sectors, which was observed the previous day, will continue. The divergence in dynamics between the S&P 500 calculated on the basis of capitalization and its equal-weighted version (RSP) emphasized the vulnerability of the market to the mood in the "Magnificent Seven" stocks.

Cintas (CTAS), Uranium Energy (UEC) and Thor Industries (THO) will report quarterly results before the main session opens. At the postmarket, KB Home (KBH), H.B. Fuller (FUL), Stitch Fix (SFIX), Steelcase (SCS) and Worthington Steel (WS).

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6600-6700 points (from -0.8% to +0.7% of the previous session's closing level).

- Shares of Lithium Americas (LAC) soared more than 75% following a report that the U.S. government is considering taking a stake in the company. According to sources, the Department of Energy is in talks to provide more funding for the development of Thacker Pass, the country's largest lithium deposit located in Nevada. This is seen by investors as a move aimed at reducing US dependence on Chinese supplies of the critical metal for battery production.

- Micron (MU) quarterly report was met with restraint by the market, the shares added only 0.8% in extended trading. The results were generally in line with analysts' expectations, while the guidance for the current quarter was cautious. Although demand for memory chips for AI servers remains strong, the unfavorable situation in the PC and smartphone markets continues to put pressure on the issuer's financials.

- Quotes of semiconductor test equipment supplier Cohu (COHU) plunged 11% on the back of its announced convertible debt offering.

- Shares of biotech Cyclerion Therapeutics (CYCN) are up 37% after announcing a licensing agreement with the Massachusetts Institute of Technology (MIT). The deal, accompanied by the announcement of a "strategic reset", will give the company access to promising new developments and allow it to focus its resources on them.

Trading on September 23 on the U.S. stock exchanges ended in the negative. The S&P 500 fell by 0.55%, the Nasdaq 100 lost 0.73%, the Dow Jones fell by 0.19%, and the Russell 2000 - by 0.24%. The key factors of pressure on quotations were investors' doubts about the sustainability of the rally associated with artificial intelligence, as well as the remark of Fed head Jerome Powell about "relatively high" valuations of stocks.

At the same time, market breadth was positive: the S&P 500 (RSP), in which all stocks are equally weighted, rose 0.12%, outperforming the capitalization-balanced index by more than 65 basis points. Thus, the correction mainly affected the quotations of the largest companies. The energy sector (XLE: +1.72%) was the leader of growth. The outsiders were producers of consumer staples (XLY: -0.94%). Shares of the "Magnificent Seven" led by Amazon (AMZN: -3.04%) and Nvidia (NVDA: -2.82%) ended the day in the red.

The preliminary estimate of business activity index (PMI) for September from S&P Global turned out to be weaker than expected. Manufacturing PMI decreased to 52 points (consensus: 52.2), and service PMI amounted to 53.9 points (consensus: 54). The slowdown in business activity growth was recorded for the second month in a row amid weakening demand. At the same time, companies noted a sharp increase in costs, the main reason for which was import duties. Businesses pointed out the difficulties in shifting these costs to consumers due to increased competition. The trend was confirmed by the September index of business activity from FRB Richmond, which fell to -17 points with a forecast of -4.

As expected, the speech of Fed Head Jerome Powell did not contain any fundamentally new theses. The speaker generally repeated the statements from the press conference on the results of the September meeting, again emphasizing that the short-term risks to inflation remain shifted upward, while the risks to the labor market - downward. Powell explained that the rate revision was dictated by the first signs of a weakening labor market, but added that the regulator should still proceed cautiously. Thus, the balanced rhetoric of the head of the Fed did not give investors new reasons to buy and only strengthened profit taking.

- Shares of Opendoor Technologies (OPEN: -15.5%) collapsed after it became known that one of the company's largest shareholders intends to sell a stake worth $95 million. Such large sales by insiders or funds are often taken by the market as a signal of lack of confidence in the company's prospects.

- McKesson (MCK: +6.4%) grew on the back of positive statements made at the Investor Day. The management raised the forecast of adjusted earnings per share for fiscal 2026 and long-term targets for this indicator, which strengthened investors' confidence in the company's development strategy.

- Nvidia (NVDA: -2.82%) shares declined despite the excitement surrounding its investment in OpenAI. Investors drew attention to the so-called cyclical nature of the deal, in which a corporation invests in a startup that then uses the proceeds to buy its own chips. This scheme, reminiscent of the "vendor financing" practices of the dot-com bubble, raised concerns about the sustainability and organicity of the proceeds.

- Shares of Crane NXT (CXT: +14.7%) soared after the company unveiled its 2026 revenue guidance for its currency printing segment, assuming an upside of 10%. This optimistic outlook is based on the Federal Reserve's recently released bill printing order, which provides the company with predictable and stable cash flow.

This article was AI-translated and verified by a human editor